Mo’ money, mo’ problems?
20 August 2012 | FELICITY DUNCAN
We may want to be paid more for our work, we may want to win big in the lottery, we may want to marry a rich partner; however we plan to get it, we all want more money.
Have you ever wondered why, though? I mean, money is obviously not an end in itself; we don’t want money so that we can fill up a room with gold coins and swim around in it like Scrooge McDuck.
Rather, we want money because we think that having more of it will make us happier, that it will enable us to do the things we want to do and to feel more secure and experience more pleasure. However, the truth is it’s not entirely clear whether more money actually does make human beings happier or not.
Now, to be fair, research shows that up to a certain point, and in a certain way, it definitely does. People who have enough money to meet their basic needs for food, shelter, and so on are generally much happier than those unfortunate souls who don’t, and people in wealthy countries tend to be happier than people in dirt poor ones.
However, the relationship is not completely linear. For example, the United Nations’ World Happiness Report found that people in Costa Rica (average income: $7 660) report almost as much satisfaction with their lives as people in Denmark (average income: $60 390), and that people in Thailand (average income: $4 420) are just as likely to report being happy yesterday as people in New Zealand (average income: $29 350). The happiness gap between middle and high income countries is not huge; clearly, it’s not just having more money that matters.
Perhaps, as Ben Bernanke and others have argued, it’s a constellation of things that are associated with national wealth – like democracy, cleaner air and water, better healthcare and so on – that make the difference in aggregate happiness levels rather than the absolute income of the people within countries.
Thus, in middle income countries where people are able to meet basic needs and get decent government services, happiness levels are comparable to those in richer nations.
On the individual level, you see similar sorts of results – the happiness benefits of having more money tend to level off at a certain point. For example, a recent study by two Princeton professors indicated that Americans’ daily happiness levels tend to rise along with their income up to an annual income of about $75 000 (around R600 000 or so), and then the daily happiness curve flattens out while the income curve continues to increase. In other words, beyond $75 000 a year, there is not much additional happiness to be squeezed out of any extra dollars earned. There’s a point at which more money does not mean more happiness.
As I noted earlier, though, money affects happiness in certain ways. In the Princeton study, the researchers looks at two types of happiness – life evaluation, which is about thinking that overall your life is pretty great, and emotional well-being, which is a measure of your day-to-day emotional state, how happy you felt yesterday, for example.
The researchers found emotional well-being improved up to $75 000 and then flattened out; however, life satisfaction continued to improve beyond the $75 000 mark – the more people earned, the more they thought their life was a success, even if they were not any happier than their less well- paid peers on a day-to-day basis.
In other words, the relationship between money and happiness is a mixed bag. Up to a certain point, it can help you deal with daily life, easing the sting of troubles and making you feel happier when you wake up in the morning.
Beyond that, however, money will give you a sense of achievement, but won’t give you any additional daily joy – for that, you’ll have to look at the three classic pillars of positive psychology: good health, a happy marriage, and a satisfying job, which are the three things that psychologists have consistently found to predict happiness.
The bottom line is that you shouldn’t make it all about the money. Remember to invest time and effort in other aspects of your life too – enjoy your job, love your spouse, and try to get some walking in. You’ll be happier tomorrow if you do.
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